State capital improvement programs and institutional arrangements for capital budgeting: The case of illinois Available to Purchase

This study describes the Illinois State capital budget process and explains why traditional capital planning has not been adopted in Illinois. The state uses non-accounting techniques and multi-attribute judgment criteria, including political and social values, to make decisions. The case suggests that regardless of their sophistication, accounting methods are, relatively, not useful in ranking capital projects across functions. The methods compare "pples" and "oranges." A comparison of capital projects across functions may be impossible with any set of methods. Intelligent sub-optimization within given functions may be the best academics and practitioners can hope for in rationalizing project choice and maintenance, particularly in large cities or state governments. Public capital-budgeting educators might shift their focus in training prospective public budgeters, from accounting methods to critical thinking, through multi-attribute analysis methods.